Do you get those cards in the mail from your bank saying “Save $300 by refinancing today!”? Then you call the bank and they say, “your break even for your refinancing will be seven months,” and it all sounds so simple? You think, “Hey, I can save $300 a month and pay for the refinancing fees in seven months, and after that, it’s just extra money in my pocket – sounds like a no-brainer!”
Like many things about mortgages, banks want a simple way to get you to take action. With mortgages its monthly payment, and with refinancing, it’s break even.
Watch this video to see why break even doesn’t make sense in 99.5% of cases and how to know if a refinancing makes sense for you.